Getting a mortgage can be stressful at the best of times. Add a pandemic and things really heat up. Whether you are applying for a mortgage or have signed contracts for your new home, here are some of the current complications to watch out for.
If you are looking for mortgage approval, you have loan approval and are looking for your dream home or you have a loan offer and want to sign contracts, the bank wants to know the following:
Have you been affected by Covid-19 financially?
If you say ‘No’, they are looking for your April/May payslip to prove that you are not getting the Government wage subsidy. If you say ‘Yes’, then some lenders are withdrawing loan offers and approvals in principle until such time as you are back in full-time employment.
Some lenders are withdrawing loan offers in full and other lenders are giving some help. However, it is still inconsistent. They are taking the view that this is a temporary situation and you will be back at work at the same pay level as you were before. They want to see those recent payslips before they will proceed.
At Cleere Mortgages, we have access to all the lenders so we can match a lender with your needs.
Brian Hayes, CEO of BPFI (Banking and Payments Federation Ireland), stated recently “that there is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole, given the changing conditions in the economy and its direct impact on incomes and employment.”
He further commented, “The change in individuals’ financial and employment circumstances will have an impact on mortgage approvals, with banks taking a pragmatic and responsible assessment of all applications from both a borrower and lender perspective.”
“Taking out a mortgage is a major undertaking for borrowers, and no lender wants to see a borrower under distress or difficulty, especially in these highly uncertain times,” he added.
There are some terrible and distressing stories out there for buyers who have paid deposits on houses, who now have been affected by the pandemic precautions and are in receipt of the Covid payment. Some lenders have now pulled their loan offers and clients are now facing losing their dream homes. Hopefully their solicitor will be able to explain the position to the lenders and these clients will get their dream home eventually.
It is hard to say if house prices will fall, as the hard data from sales is not available yet. Some buyers are holding off to see if prices will fall, while some sellers are holding off putting their home on the market until they feel the time is right.
If you were due to receive a mortgage exemption or were hoping to get one, don’t bank on it now. Under the Central Bank mortgage-lending rules, the maximum a person can borrow is 3½ times their income. Lenders are permitted to give mortgages of no more than 80 per cent of the value of a property, rising to 90 per cent for a first-time buyer.
However, lenders also have the discretion to breach the rules for 20 per cent of its mortgage book, as long as they are comfortable that a would-be borrower has the capacity to repay the loan in the agreed time frame. Some lenders have already started restricting exemptions as a result of the Covid-19 crisis. It is very hard to see when and if these will be lifted in the near future.
We at Cleere Mortgages have been busy with queries and new applicants. If your financial situation is unchanged by the pandemic and you want to get the wheels in motion to buy, the banks/lenders are open for business. We are also open for business and we are happy to help in any way possible.
We can be contacted as follows:
P: 086 3852041 Carmel (Mortgage Consultant)
P 086 4114985 Gearoid (Financial Advisor)
P 056 7721854 Office